Regulation on the order of distribution and payment of authors’ remuneration

Translation from Russian

APPROVED
by the RAO Authors’ Council Resolution
No. 18 of October 28, 2010

Rules on distribution and payment of royalties

1. General Provisions

1. The present Rules on distribution and payment of royalties (hereinafter “Rules”) establish the procedure for distribution and payment of royalties collected by the All-Russian Non-Governmental Organization “Russian Authors’ Society” (RAO) during the exercise of its statutory functions of collective management of rights:

1) for public performance, broadcast into the air or via cable, including by way of retransmission of published musical works (with or without text), excerpts from dramatico-musical works and small form literary works (piece of poetry, short story, etc. – hereinafter “literary works”);

2) during exercise of rights of composers – authors of musical works (with or without text) used in an audiovisual work to receive remuneration for public performance or broadcast into the air or via cable of such audiovisual work.

2. This present Rules have been worked out in conformity with the Civil Code of the Russian Federation and other acts of legislation, the Statute of RAO and its other regulatory documents, and the documents of the CISAC.

3. The terms as used herein shall have the following meaning:

AVW – audiovisual work;

RAO DB, RAO data base – an integrated population of data on the rightowners, works and the rights thereon registered in RAO, and other information enabling RAO to collect, distribute and pay out royalties to the rightowners and royalty recipients;

genre of the work – a category used for classification of works; a list of genres of works shall be approved by the Authors’ Council of RAO;

registered work – a work registered in RAO as indicated in the Regulations On the Procedure for the Record Keeping of Rightowners and Registration of Works and the Rights Thereon approved by the General Director of RAO;

identified work – a work in the submitted usage returns uniquely matched to the documented work in RAO DB within the tolerance range set forth below;

foreign society – an organization for collective management of rights which operates in the territory of a foreign state and has a mutual representation contract with RAO;

international data bases, international DB – an integrated population of data on rightowners, works and the rights thereon (WID, CIS-Net, IPI) registered in foreign societies;

non-registered work – a work in regard of which registration requirements as specified in the Regulations On the Procedure for the Record Keeping of Rightowners and Registration of Works and the Rights Thereon approved by the General Director of RAO have not been fulfilled;

unidentified work – a work in the submitted usage returns which has not been uniquely matched to the documented work in RAO DB within the tolerance range set forth below;

user – a physical person or a legal entity, including sole proprietors, using the works by means of public performance, broadcast into the air and/or via cable by virtue of the contracts with RAO;

royalty recipient – a physical person or a legal entity who is not a rightowner and who is entitled to receive royalties by virtue of an contract with the rightowner;

rightowner – a physical person or a legal entity who has the exclusive right on a work by operation of law, by virtue of a contract of alienation of the right and on other legal grounds, or because he signed with the owner of the exclusive right on the work a licensing contract giving him the right to use the work without reserving for the licensor the right to issue licenses to third parties on terms of the exclusive license, or because he has the right to receive royalties for public performance, broadcast into the air or via cable of musical work (with or without text) used in an audiovisual work;

work – a published musical work (with or without text), an excerpt from dramatico-musical work, literary work and musical work (with or without text) used in an audiovisual work;

RAO distribution system – a computer-aided system used for automated distribution of royalties.

statistical data – information on the use of works by Russian and foreign authors obtained by methods of statistical analysis and developed inter alia with reference to the user returns, RAO data base, independent surveys, user sampling, etc.

Other terms and definitions as used herein shall have the meaning as prescribed by the existing legislation.

2. Distribution of royalties

2.1 Distribution of royalties collected in the territory of the Russian Federation

2.1.1 Basic principles

1. In accordance with the Statute, distribution and payment of royalties shall be carried out on a timely basis at least two times per annum.

2. Distribution of royalties collected in the Territory of the Russian Federation shall be effected against usage returns and RAO work notification records.

Subject to the stipulations of the present Rules, if the distribution enabling data can not be obtained due to the objective cause or distribution against the usage returns is not economically feasible, the collected amount can be distributed by reference to statistical data.

The contents and forms of usage returns shall be specified in the contracts between RAO and the users.

3. In order to be accepted for distribution, usage returns must be filed in due form and contain sufficient data for the allocation of royalties.

Usage return shall be deemed inadequate if:

– it has not been produced in the due form prescribed in the contract;
– it has not been sealed and signed by the user’s authorized representative, or it has been signed by a party without the right of signature;
– its mandatory information columns have not been filled out;
– it does not state the names of authors and/or the title of works;
– it knowingly states non-authenyic information (performer is shown in the “author” column, etc.);
– it contains information in one of the Russian Federation national languages without translation into Russian;
– it contains information in the national language of one of the CIS countries without translation into Russian or transliteration (Cyrillic alphabet);
– Latin letters are used in the spelling of Russian works titles or authors names;
– foreign works titles or authors names are written in Cyrillic alphabet or Russian translation;
– its font size is less than 12;
– it has been produced in handwriting (exception can be made in regard of circus, New-Year party, theatricalized and life concert performances).

If so, the usage returns shall be forwarded to the user for refinement (and deemed not to have been submitted) or the corresponding amount of royalties shall be distributed against the available usage returns or by reference to the statistical data, whichever is more feasible.

If the usage returns is forwarded to the user for refinement, the royalties accompanied by such usage returns shall not be allocated until it is submitted in due form.

If royalties are distributed on the basis of the available usage returns, when appropriate, the user can be requested to assess additional royalties and submit the corresponding report documentation.

The requirements of the present Article can be applicable to other documentation which is to be submitted by the user under the contract and which provides the basis for distribution (musical reference, etc.).

4. Usage returns shall be processed, i.e. its data shall be entered into RAO distribution system, only if the amounts pertaining to the said usage returns have been received by RAO.

5. The distribution shall include protected works by Russian and foreign authors with the exception of works the rights on which have been duly taken by the rightowner from RAO management in manner prescribed by the Provision “On the Procedure For Taking the Rights and/or Published Works From RAO Management (Repertoire) By the Rightowners Who Signed With RAO Contracts On the Delegation Of Powers For Collective Management of Rights” and the Provision “On the Procedure For Taking the Rights and/or Published Works From RAO Management (Repertoire)”.

6. Royalties credited for:

– unidentified works and authors;
– non-registered works and authors,

shall be set aside for three years starting from the moment of distribution.

In such a case, due efforts shall be made to find the rightowners and identify and register the works, authors and rightowners.

Once the work, authors/rightowners are identified and registered, the reserved
royalties shall be paid out in accordance with the established procedure.

If after the expiry of the three-year period, no information required for effecting distribution has been received, the reserved royalties shall be allocated for redistribution on the basis of statistical data.

7. RAO can distribute collected royalties with reference to statistical data provided all the following conditions are met concomitantly:

  • the usage returns has been filed on paper (electronic copy is not available);
  • the returns have been submitted by the user operating in the territory of the city of Moscow or St. Petersburg;
  • the amount of royalties received under the usage report is less than one hundred thousand rubles;
  • the amount of royalties received per one work is less than one hundred rubles;
  • the received amount of royalties does not relate to the works performed on stage (“live” performance).

2.1.2 Russian repertoire royalties distribution rules

1. Works usage returns shall be processed with reference to the RAO DB information on the works and rightowners registration.
During the usage returns data-processing operation, the works shown in the returns are identified and searched in the RAO DB.

2. If the work title and the names of the authors information in the usage returns match the corresponding registration data in the RAO DB, but the work’s genre does not match, the royalties shall be credited in accordance with the work registration in the RAO DB.

3. If the RAO DB does not contain the work that fully matches the work shown in the usage returns, the RAO DB shall be searched for the following variants:

  • – works whose authors fully match the authors shown in the usage returns and its title matches on the basis of transliteration;
  • – works whose authors fully match the authors shown in the usage returns and its title matches given the digits are written in words;
  • – works whose authors fully match the authors shown in the usage returns and its title in the RAO DB or in the returns appear as a fragment (line) of the text of the work.

If one of the aforementioned variants is found in the RAO DB, decision on the logging of the usage returns data into RAO distribution system shall be taken by an authorized executive officer.

4. If the work shown in the usage returns does not exist in the RAO DB, the information on such work shall be entered into the RAO DB and RAO distribution system on the basis of the usage returns with a remark about the absence of registration.

The amount of royalties credited for such work shall be reserved in accordance with para 6 of Section 2.1.1 Basic Principles.

The reserved royalties shall be distributed among the rightowners (royalty recipients) and paid off after the work is registered in the RAO DB. However, the amount of royalties credited for the work shall not be reassessed.

5. If usage returns contains an adapted work and the permission for its adaptation has not been received, the royalties shall be put aside until the corresponding notification from the author of the original work or the contract on adaptation of the work are received.

2.1.3 Foreign repertoire royalties distribution rules

1. Usage returns containing foreign works shall be processed on the basis of works and rightowners registration information in the RAO DB according to the procedure set forth in Section 2.1.2 above.

2. If the work shown in the usage returns does not exist in the RAO DB, the information on such work shall be entered into the RAO DB and into the distribution system on the basis of international fiches received from sister Societies and the data in the international data bases.

3. If the work shown in the usage returns does not exist in the international data bases or the work exists in the international data bases but the shares information is not available and at least one of the authors (rightowners) and his sister society affiliation is known, the distribution shall be effected in accordance with the CISAC rules (Lack of Documentation).

4. If the work shown in the usage returns does not exist in the RAO DB and international data bases, information on such work shall be entered into the RAO DB and into the RAO distribution system on the basis of the user returns. Royalties credited for such work shall be put aside for three years from the moment of distribution.

According to the CISAC rules, information on such works shall be forwarded to the sister Societies (“BLANK BOX) and to the sub-publishers operating in the Russian Federation territory with the view of ascertaining data on the unidentified works.

5. During usage returns data-processing operation it shall be taken into consideration whether the works used were original or derivative.

2.1.4 Specifics of distribution of royalties collected for the broadcast into the air and via cable of musical works (with or without text), excerpts from dramatico-musical works and literary works

1. Distribution of royalty collected for the broadcast into the air and via cable of musical works (with or without text), excerpts from dramatico-musical works and literary works shall figure on:

  • – the genre of the work;
  • – duration of the work in seconds;
  • – the number of performances of each work (excerpt from a work)

2. For all musical works (with or without text), with the exception of those included in an audiovisual work, in regard of which usage returns do not have information on their duration, a 3 minute duration shall be applied.

2.1.5 Specifics of distribution of royalties collected for the public performance of musical works (with or without text), excerpts from dramatico-musical works and literary works

1. Distribution of royalty collected for the public performance of musical works (with or without text), excerpts from dramatico-musical works and literary works shall figure on:

  • – the genre of the work;
  • – the number of performances of each work (excerpt from a work).

2. In the public performance distribution the following specifics shall be taken into consideration:

2.1 Theatricalized, New-Year party and variety performances

Distribution for theatricalized, variety and New-Year party performances based on a single plot shall distinguish:

  • – the main program represented by a literary work with a single plot. The main program also includes musical accompaniment if it was written specially for the said performance;
  • – inserted items represented by the previously created musical works (with or without text) or literary works included in the said performance.

The royalties for inserted items and the main program shall be credited as follows:

1) If the main program has musical accompaniment:

– the amount distributed for inserted items shall depend on the number of works performed in the latter:

  • • 1 to 3 works – 5% of the aggregate assessed amount;
  • • 4 to 5 works – 10% of the aggregate assessed amount;
  • • more than 5 works – 1/3 of the aggregate assessed amount.

– the remaining amount shall be credited to the main program. Distribution among authors (rightowners) of the main program shall be in the following proportion:

• 3/4 – to lyric writer, 1/4 – to composer, if otherwise is not provided for in the agreement between them.

2) If the main program does not have musical accompaniment (text only), royalties shall be distributed as follows:

• 2/3 – to the main program lyric writer;
• 1/3 – pro rata among all inserted items.

2.2 Concerts (“live” performance)

If in a recital, along with the main performer some other performing artists participate opening the main program, the royalties shall be allocated in the following order:

The amount of royalties due for the works performed by other artists (depending on the number of the works performed) shall be:

– 1 to 5 works – 5% of the aggregate assessed amount;
– more than 5 works – 10% of the aggregate assessed amount.

The remaining part of the aggregate assessed amount shall be credited to the works performed by the main performer.

2.3 Public performance of works per technical means (cafeterias, restaurants, discoteques, shops, etc.)

If a user returns shows that in the reporting period public performance in the user’s territory was effected through the medium of television and radio sets (indicating the names of the TV channels and radio stations whose programs had been publicly performed), the royalties assessed on the basis of such returns shall be accumulated separately.

Following the said TV and radio returns based royalty allocation, the accumulated amounts shall be distributed by matching with reference to the corresponding reports.

2.1.6 Distribution of royalties collected for the public performance or broadcast into the air or via cable of musical works (with or without text) used in an audiovisual work

1. Distribution of royalties collected for public performance or broadcast into the air or via cable of musical works (with or without text) used in an audiovisual work shall be effected on the basis of user returns data, RAO data base information and, when appropriate, statistical data.

2. All audiovisual works (Russian and foreign) shown in the returns that use protected musical works (with or without text) shall be included in the distribution.

3. Information about musical works included in an audiovisual work, their duration and authors and rightowners data are stated in the producer’s musical reference (for Russian audiovisual works) or in the CUE-sheet (for foreign audiovisual works).

The royalties for the use of musical works in an audiovisual work shall be allocated pro rata to the duration of each work.

The amount allocated to musical works used in the audiovisual work shall be distributed among the rightowners (royalty recipients) according to the RAO DB notification data.

4. The amount allocated for the use of works in the audiovisual work in regard to which no distribution enabling information is available (lack of a musical reference, CUE-sheet) shall be put aside for three years from the moment of distribution.

If upon the expiry of the three-year period, no information required for the carrying out distribution has been received, the said amount shall be redistributed by reference to statistical data.

5. Gathering of distribution enabling information (musical references, CUE-sheets) shall be carried out through the international data bases, by way of queries to sister Societies (with regard to foreign audiovisual works) and to the producers of audiovisual works – TV channels, motion picture studios and the State Cinema Committee archives (with regard to Russian audiovisual works).

The distribution enabling information gathering activity in regard to the audiovisual work is carried out each time it is shown in the user returns and can be discontinued if it has been proved impossible to obtain the requisite data.

6. If in the course of a three-year period from the moment of distribution, the distribution enabling information has been received and the musical works have been identified or notified, the amount of royalties reserved earlier shall be allocated among the rightowners (royalty receipients) and paid out according to the established procedure.

2.1.7 Specifics of distribution of royalties collected for public performance of audiovisual works (movie theaters)

1. The amount of royalties for public performance of musical works within an audiovisual work shall be shown in the user returns in regard to each audiovisual work.

Distribution of the said amount shall be effected in accordance with para 3 of Article 2.1.6 above.

2. If the user returns shows that the amount of royalties per one audiovisual work for the overall number of shows is less than one hundred rubles, RAO can distribute such amounts on the basis of statistics.

2.1.8 Specifics of distribution of royalties collected for the communication into the air or via cable of audiovisual works (television)

1. The amount of royalties collected for the communication into the air or via cable of musical works used in an audiovisual work shall be assessed on the basis of the total duration (in seconds) of the musical works in the audiovisual work.

The total duration of musical works within an audiovisual work shall be determined per musical reference or CUE-sheet data.

2. If at the time of filing of the usage report, information on the musical works within an audiovisual work needed for effecting distribution is not available, over one month period information gathering activities shall be carried out in order to obtain the lacking data and log it into the RAO distribution system.

3. If upon the expiry of a one-month period indicated in para 2 of Article 2.1.8 above, no validated information about the works duration (musical references, CUE-sheets) has been received, their duration shall be determined as follows:

Full-length film (feature, television, animated) of total duration over 50 min. 900 seconds
Short-length film (feature, television, animated) of total duration from 10 to 50 min. 420 seconds
Documentary film 450 seconds
Picture play 420 seconds
Concert film Total duration of film
Reality show 300 seconds
Musical film (feature, TV, animated) 1200 seconds
Serial film (feature, feature-television, television, animated) 300 seconds per each episode
Mini-serial film (television, animated) 60 seconds per each episode
Film (documentary, animated) of less than 10 minutes duration total duration of film
News-reels 180 seconds
Advertising 15 seconds

The above rules of determining the duration of musical works used in an audiovisual work shall be followed if the duration of a work has not been determined according to the previously applicable rules prior to the coming into force of the present Rules.

4. The royalties allocated to audiovisual works under the rules in the para 3 of Article 2.1.8 above shall be put aside in keeping with the para 4 of Article 2.1.6 until the receipt of the information enabling carrying out further distribution.

After the receipt of the requisite information, no fresh accounts of allocated royalties shall be made.

2.2 Distribution of royalties remitted by sister societies

1. Distribution of royalties collected in the foreign territories by sister Societies under mutual representation contracts with RAO shall be effected on the basis of their distribution statements.

2. Distribution statements submitted by a sister Society in hard copy and/or electronic format contain the following information:

– the title of the audiovisual work (in regard to distribution for the musical works used in the audiovisual work);
– the title of the musical work;
– the name of the rightowner;
– the share (percent) of each rightowner;
– the amount of royalties due to each rightowner in the currency of the sister Society country;

3. Distribution of royalties remitted by a sister Society shall be effected with reference to the distribution statement information and RAO data base registration data.

4. Distribution of royalties remitted by a sister Society shall be in US dollars.

5. Distribution statements submitted in due form shall be distributed on, provided the corresponding amounts of royalties have been remitted to the RAO account.

6. If the sister Society distribution statement information does not agree with the RAO Data Base registration data, distribution shall be carried out with reference to the latter.

If it is determined that a musical work in the distribution statement is assessed an excessive amount of royalties, such amount shall be returned to the remitting sister Society together with the documentation containing data on the work registration in the RAO Data Base (international fiche).

If a work is not credited royalties in full, the amount shown in the statement shall be distributed among all rightowners (royalty recipients) according to RAO registration data and the sister Society shall be sent the international fiche and shall be requested to assess the required additional amount.

7. In case of finding in the sister Society distribution statement works that do not belong to RAO repertoire and/or rightowners from other societies, the respective amounts are to be sent back.

8. If the distribution statement shows the returned royalties that RAO has earlier sent by mistake to a sister Society, the said amounts shall be redistributed on the basis of the updated information.

3. Deductions from royalties

1. Pursuant to Article 1243.4.2 of the RF Civil Code and its Statute, RAO shall make deductions from collected royalties to cover the costs of collection, distribution and payment of royalties.

2. The said amounts are deducted at the moment of the transfer of royalties to the personal account of the rightowner (royalty recipient).

3. The size of the deducted amounts shall be established by RAO regulations in accordance with its Statute.

4. In the cases provided for by the effective legislation, RAO shall perform the functions of a tax agent and shall withhold and transfer to the budget the corresponding amounts of taxes from the royalties credited to the rightowner (royalty recipient) during distribution.

5. In the cases provided for by the effective legislation (in particular, by virtue of enforcement order), RAO shall withhold other amounts from the royalties due to the rightowner (royalty recipient) and shall transfer those amounts to the specified beneficiary.

4. Procedure and periods for payment of royalties

1. In accordance with the Statute payment of royalties shall be carried out on a timely basis at least two times per annum.

2. Payments of royalties collected in the territory of the Russian Federation for the use of works shall be made on a monthly basis.

Payments of royalties collected in the territory of the Russian Federation for musical works used in an audiovisual work shall be made on a monthly basis (with regard to broadcast into the air and via cable) or quarterly (with regard to public performance).

Payments of royalties received from sister Societies shall be made quarterly (in rubles).

Remittances to the sister Societies shall be made on a timely basis according to the schedule established by the contracts with the latter. Returned royalties shall be sent to the sister Societies together with the scheduled remittances.

3. Payment of royalties distributed for the works found to be in dispute according to the Regulations On the Procedure for the Record Keeping of Rightowners and Registration of Works and the Rights Thereon shall be suspended until the parties involved in the dispute submit the documents proving that the dispute has been resolved.

4. Payment of royalties that had been put aside and then credited to the rightowner (royalty recipient) following subsequent identification and/or registration of works in the RAO DB, shall be made together with the scheduled royalty payment.